A contractor is a person, business, or corporation that works on a project or task under terms specified in a contract. An independent contractor is not like the regular employee. After the job is done or the length of the project is reached, the contractor can go on and accept another contract not necessarily with the previous client. Contractors do not enjoy the basic benefits that a regular employee enjoys. However, they are able to enjoy the luxury of being their own boss and working flexible work hours.
Contractors are employed when companies look for persons to fill a short-term gap for a project or task. Being independent contractors, they also have the ability to specify their own contractor rates. The contractor rates are not set on just standards but on a per project basis too. There are also other factors that influence the setting of contractor rates of pay.
The most obvious factor that influences the pay rate of a contractor is the skill. If the skill is in demand at the moment, the pay rate may be generally set to a higher tone. For example, during the time of the e-commerce boom, a lot of businesses suddenly became engrossed in setting up their own corporate websites. IT skilled workers like website developers and administrators became in demand that these people were able to set a higher rate for the job.
Experience is also another factor that influences contractor pay rates. Some contractor jobs may be purely technical and new in the market. Still, the traditional business thinking of the importance of the length of experience cannot be overlooked. Of course, the length of experience is a given in getting a contractor in the field of, let's say, medicine and law.
The location of the job also influences the pay rate. For example, a contractor may charge more if he is required to go to a workplace than being allowed to telecommute. Independent contractors do not have transportation allowances like the regular employees. Also, a city that is more developed may have contractors that are charging more than contractors living in the suburbs.
Lastly, the general economic climate influences the pay rates of contractors. The recent economic meltdown has put so many regular employees out of job. A lot of these displaced workers have turned into freelance work. The sudden increase in the population of independent contractors has forced many to lower their rates to have more chances of getting the project. In addition to that, there has been a dramatic fall in the number of companies who can afford independent contractors.
Being an independent contractor may look like more of a lifestyle than a career to others. They only see the flexible working hours and the possibility of working at home. What they do not realize is that the pay rates are not stable as the salaries of regular employees. This is the sacrifice that an independent contractor has to pay in being his own boss.